Robert Bennett: Create wealth before distributing it

By Robert Bennett , For the Deseret News

Published: Monday, Dec. 9 2013 12:00 a.m. MST

Pope Francis prays in front of the statue of the Virgin Mary, on the occasion of the Immaculate Conception feast, in Rome, Sunday, Dec. 8, 2013. Francis, in the heart of Rome's fanciest shopping district, has prayed that the poor are never forgotten. (Gregorio Borgia, Associated Press)

Pope Francis has called for a more equitable distribution of the world’s wealth, a statement which some commentators have described as a condemnation of capitalism. I shall not try to parse the Pope’s words, but make this point: unless wealth is created in the first place, there will be nothing to distribute. The countries where the statistical gap between rich and poor is smallest tend to be those that are the poorest. Consider Rwanda, where equality has been achieved by destroying the economy for everyone.

The first Third World country I visited was India 30 years ago, where I was overwhelmed by the incredible poverty that was everywhere I looked. Even in places that catered to Westerners, those locations that were considered upscale, the facilities were old and backward and dirty. Worse, resignation and hopelessness were in the faces of everyone I saw, or so it seemed to me.

The same was true in other places I went. When I first visited Russia not long after the fall of the Soviet Union, I found Moscow to be depressing. It wasn’t as poor as Delhi, but everything in it struck me as gray — the sky, the buildings, the streets, even the people. In Hanoi, the beggars on the street were heart wrenching. In Beijing, bicycles were everywhere because no one beyond the elite few could afford a car.

I have since been back to these countries and the changes that have occurred in a very short time have been truly stunning. Moscow now almost sparkles, with bustling commerce and color everywhere. Hanoi is filled with zippy motor scooters driven by young people wearing snappy western clothes. Beijing boasts some of the most impressive architecture in the world and its streets are jammed with cars, the leading make being Volkswagen.

And India? My wife and I have just returned from a week there, where I attended board meetings in a company located just outside of Mumbai. There is still plenty of poverty — it is estimated than 50% of Indians still exist on less than $2.00 a day — but tremendous progress has been made in the last 30 years. Poverty levels as a percentage of the world’s population have been dropping dramatically, a fact the Pope did not mention. What have been the driving forces behind this trend?

Primarily two things: the absence of war and the presence of free markets.

Russia, China and Vietnam were all involved in the Cold War — in Vietnam, it got very hot — and closed off from world commerce. Once that ended and they embraced the idea of free markets, they became de facto capitalists, particularly the Chinese. Their GDP, once the size of Italy’s, now has surpassed Japan to become second only to us.

India was not at war, but her socialist government was deliberately patterned after the Soviet model and stifled growth. The ruling Congress Party there finally pivoted towards capitalism, after which the economy began to boom. India’s recent prosperity has enabled her to do many good things for her poverty stricken citizens. Many believe she will catch China just as China caught Japan. From discussions with the management of the Indian company on whose board I sit, whose CEO was trained in the United States, it is clear that they are determined to try.

The basic principle is this: it is right and proper for the Pope and others to talk about how the golden eggs should be distributed, but the most important thing to do to alleviate poverty is to make sure the golden goose stays healthy enough to continue to lay them. How this applies to America will be the subject of next week’s column.

Robert Bennett, former U.S. senator from Utah, is a part-time teacher, researcher and lecturer at the University of Utah's Hinckley Institute of Politics.